Deng Xiaoping profile of a visionary reformer

Deng Xiaoping profile of a visionary reformer

Deng Xiaoping: profile of a visionary reformer

History reveals that many of the seismic changes in the political or economic fates of entire nations have often hinged on the drive of a handful of individuals. In the case of China's economy, much of the modernization that occurred towards the turn of the 20th century can be laid firmly at the foot of one visionary reformer: Deng Xiaoping.

As leader of the Communist Party of China he led his nation from an insular outlook towards a global market economy. Although he never held office as China's head of state, his position was known as the ‘paramount leader' of the People's Republic – a position he held from 1978 until 1992.

He was born into a relatively lowly peasant background in 1904 in Guang'an in Sichuan, a province in the rural heartland of China. Studying and working in France, he became strongly influenced by Marxist and Leninist doctrines, joining the Communist Party of China in 1923. After returning to his homeland he served as a commissar for the party in rural regions, working hard to convince the often conservative and distrustful peasant workers of the need to embrace the political change advocated by Communism.

His place in the annals of the history of the People's Republic was assured by his status as a revolutionary veteran of the Long March (the tactical retreat by Mao Zedong's forces facing the onslaught of General Chiang Kai-shek's Nationalist armies – an epic 12,500 kilometre struggle through some of western China's most barren terrains). Following the triumph of the Communist forces and the establishment of the People's Republic in 1949, Deng continued to serve the party in mainly rural locations, such as Tibet and other southwestern provinces, in order to consolidate the control of the new regime.

Deng played an active role in the economic reconstruction of China in the 1960s, a period known as ‘The Great Leap Forward'. The following years were characterized by intense political turmoil. Nevertheless Deng proved himself to be an apt leader, and became known as one of the chief architects of progressive forms of socialist thinking. Following on from this, he spearheaded economic reform in the late 1970s, principally through a fusion of socialist principles with free market aspirations, otherwise known as the ‘socialist market economy'.

Deng's contribution to China's economic evolution can never be understated. He is widely credited as having developed the Chinese economy into one of the fastest growing in the planet, raising living standards for hundreds of millions of his fellow citizens.

Chinese trade in Africa

Chinese trade in Africa

Chinese trade in Africa

If you ever holiday in Africa you will notice a curious phenomenon. In many countries, when state television has concluded its daily broadcasts, the channels do not shut down for the night. Neither do they switch to wall-to-wall CNN news reports as if often the case in other countries across the globe. What the casual viewer is far more likely to be treated to are reports about domestic affairs in China.

In Malawi, President Bingu wa Mutharika had a visionary moment that has had a long-term impact on his country's economic fortunes. Five years ago he made a decision to abandon Malawi's longstanding business partner, Taiwan, and go for the potential of the distinctly larger of the Chinese markets, establishing diplomatic and economic ties with the People's Republic.

For anyone jetting into Malawi's capital, Lilongwe, the results of this new collusion are plain to see. Chinese contractors have been responsible for some distinctive alterations to the city skyline. The new parliament building was constructed in under a year, and a brand new conference centre took a mere couple of weeks longer. Both of these major construction projects are estimated to have created jobs for a total of 1400 Malawian workers; split into 500 and 900 respectively.

China is also responsible for the delivery of the luxurious five-star Golden Peacock hotel, offering hundreds more permanent jobs for African locals. The Asian superpower is also behind numerous other initiatives, such as presidential accommodation, schools, universities and roads, not to mention over 600 drilling holes for water. In the near future Malawians can expect a national sports stadium and an agriculture technology centre.

While these are all obvious and highly visible examples of Chinese investment in Africa, there are also a great deal of projects at grass-roots level. Chinese expertise has helped to equip farmers for the vagaries of the continent's climatic conditions, as well as training up doctors with the latest in medical and pharmaceutical facilities. Many Africans have taken up Chinese scholarships.

China has long surpassed the USA as Africa's leading trading partner, with bilateral trade growing to $160 billion from $10.6 billion in the last couple of years. This phenomenal leap in the figures is symptomatic of China's devotion to the potential markets Africa has to offer, such as its untold riches in minerals, oil and gas.

Chinese financial statistics

Chinese financial statistics

Chinese financial statistics

Any snapshot of how a country's economy is performing relies on statistics. These give an excellent overview, with all the complex machinations involved in trade, commerce and retail trends drilled right down to the bare bones of the facts and figures.

Chinese Exports Exports in China are reported by the General Administration of Customs. According to that office, Chinese exports increased to 1992.30 hundred million US dollars from 1793.81 hundred million US dollars between November and December 2012.

Chinese Imports The same organisation stated that the same period imports to China increased from 1597.47 hundred million US dollars to 1676.11hundred million US dollars.

Consumer spending Figures on consumer spending in China are collated by the National Bureau of Statistics, China. The figures increased from creased from 133290.90 CNY HML to 164945.20 CNY HML from 2010 to 2011.

Balance of trade According to the General Administration of Customs, the Chinese economy recorded a trade surplus of 316.18 hundred million US dollars during December 2012.

Consumer Price Index The China Consumer Price Index, or CPI, increased by 102.50 index points from 102 between November and December 2012, as reported by the National Bureau of Statistics, China.

Inventories The Bureau of Statistics also recorded that changes in inventories in China had increased from 9988.70 CNY HML to 11963.50 CNY HML from 2010 to 2011.

Prime Lending Rate The bank lending rate in China remained at 6%in January of this year, compared to 6% in December 2012. The bank lending rate is reported by the People's Bank of China.

Export prices Export Prices in China increased to 99.50 Index Points in November of 2012 from 99.30 Index Points in October of 2012. Export Prices in China is reported by the National Bureau of Statistics, China.

Capital Flows As reported by the State Administration of Foreign Exchange, China, Chinese capital flows increased to 2210.56 hundred million US dollars in 2011 from 286.86 hundred million US dollars in 2010.

Foreign Exchange Reserves The People's Bank of China.reported that China's Foreign Exchange Reserves rose to 3310000 hundred million US dollars in December of 2012 from 3285095 hundred million US dollars in September of 2012.

Chinese economic forecasts

Chinese economic forecasts

Chinese economic forecasts

It is difficult to gauge exact outcomes in terms of longer-term predictions for the Chinese economy, mainly due to the sheer size of the market. Much of the reaction to trade potential in the vicinity could justifiably be described as ‘knee jerk', leading to traditional markets being underweighted in most institutional portfolios. However, China will be enjoying the status of the primary long-term investment destination of choice due to the vast potential market. The Pearl River Delta alone, the biggest manufacturing region on the planet, offers a pool of consumers that western nations can only dream of, numbering over 450 million.

Chinese economists will be looking to whether or not inflationary concerns will be outstripping growth and employment as priorities for the nation. The monetary policy of China will impact the growth of internal economies, which will have a knock-on effect on marginal investment, as well as net capital flowing into the China markets.

Western speculators remain concerned about the longer-term impact of China's currency revaluation that will determine competitiveness and trade balances. Various governments are continuing to apply political pressure on China to take this step for one simple reason. It could seriously level the playing field for manufacturers, boosting profits throughout a range of the expectant industrialised nations waiting in the wings. Investors will also be paying attention to other emerging markets, as will the Chinese speculators themselves. There will always be a wider picture than just comparing the China to USA model.

The China currency issue is bound to have a major impact on capital inflows, so economists are being attracted to Chinese ren-denominated investments due to the potential or benefitting from unit growth in addition to the currency appreciation factor involved in any revaluation. If revaluation occurs in the near future, this may well provoke a sizeable windfall which could have the effect of dampening further interest.